Bitcoin plunged to about $17,749 and ether fell to about $897 at around 4:15 E.T. on Saturday afternoon, as the sell-off in the crypto market accelerates. The world’s two most popular cryptocurrencies are down more than 35% in the past week, as both breach symbolic price barriers.
Bitcoin bounced back to around $18,955 and ether was trading at about $995 just after 8 p.m. ET.
The carnage in the crypto market is partly caused by pressure from macroeconomic forces, including spiraling inflation and a succession of Fed rate hikes. We have also seen these blue chip cryptos track equities lower. It doesn’t help that crypto firms are laying off large swaths of employees, and some of the most popular names in the industry are facing solvency meltdowns.
Bitcoin peaked at $68,789.63 in November. Ether peaked at $4,891.70 that same month. Bitcoin last traded this low around December 2020.
Here’s how we got here.
The week started with crypto prices plummeting, and bitcoin falling as much as 17% at one point in the day. It seemed like the crypto winter was here.
In the chaos, Celsius, a major crypto staking and lending firm, shocked the market when it announced that all withdrawals, swaps and transfers between accounts have been paused due to “extreme market conditions.” In a memo addressed to the Celsius Community, the platform also said the move was designed to “stabilize liquidity and operations.”
Celsius effectively locked up its $12 billion in crypto assets under management, raising concerns about the platform’s solvency. The news rippled across the crypto industry, reminding some of what happened in May, when a failed U.S. dollar-pegged stablecoin project lost $60 billion in value and dragged the wider crypto industry down with it.
Celsius was known for offering users a yield of up to 18.63% on their deposits. It’s like a product a bank would offer, except with none of the regulatory safeguards.